How Innovation Is Shaking Up the Banking World

In looking back several years to the types and caliber of banking services available, it is easy to see just how far innovation has taken the financial sector. These changes are not small but all encompassing. In other words, all services have undergone some degree of change. Since most people today prefer to conduct banking and make payments online, the banking industry as a whole has evolved.

As the saying goes, the past is a good predictor of the future. With an abundance of changes already made, there is no question that even more exciting changes are coming in the near future.

Fintech solutions are continually modifying and evolving in an effort to meet demands presented by both online customers and retailers. To create a more powerful and efficient online banking and payment solution, many strategies have already been implemented. There are also a number of predictions for the future that show how the retail industry will be reshaped.

Introduction of Mobile Payments

For online payments and banking, mobile payments are one of the most significant changes. Although these changes cover a broad range of things, a program that MasterCard launched not too long ago is a perfect example of just how powerful the impact has been. With this program, an individual takes a selfie, scans the photo, and then uses the photo to gain access to accounts.

However, MasterCard is in the process of developing even more biometrics authentication apps, including those that use cardiac rhythm, facial identification, and voice recognition. Regardless, there are three goals. These include providing accounts with better security protection, streamlining online banking and payment options, and eliminating complications.

For making mobile payments, a number of outstanding options already exist. A variety of apps allows consumers to purchase products and services from a specific merchant. Not only is the process easy, it is completely safe since data are maintained only on the user’s device. At no time does the merchant’s device store the customer’s proprietary information.

Enhanced Options for Mobile Wallets

Another major change with online banking and payments is the introduction of mobile wallets. These offer advantages for both the retailer and customer. For retailers, the biggest advantage is having the ability to study customers’ shopping behavior. By knowing what customers prefer, retailers can make appropriate adjustments that enhance the overall buying experience.

Interestingly, there is the potential for mobile payments to encourage people to shop in physical stores. With purchases being made online and at actual retail stores, sales increase dramatically, as does revenue.

After mobile wallets were introduced, there was one main provider. At that time in 2014, Apple had pretty much cornered the market, until a year later, when Samsung and Google joined in. Additional companies, like Chase, Walmart, and Amazon, soon followed suit, along with Facebook and various other social media sites. Now that their online payment options are implemented, customers can send money and purchase goods.

As the number of innovative changes to online banking and payments increased, more companies began to pay better attention. This led to the estimate that the volume of in-store mobile payments by 2020 will reach $500 billion.

Overall, growth potential for making online payments via a mobile device has reached beyond what anyone expected. Therefore, it is predicted that by 2025, 75 percent of all transactions will be made using mobile wallets as opposed to real cash. This is a great indicator of the degree of confidence that people have with this online payment method.

Popularity of Digital Remittances

Before digital remittances were available, sending money around the world was complex and challenging. Today, this process is very different. A company called Xoom, which was founded in San Francisco in 2001, is one of many startups now involved with digital remittances. However, the level of growth achieved by this company is so great that it has now surpassed MoneyGram.

Alternative Peer-to-Peer Lending

Growth pertaining to online banking and payments is seen in many areas, including peer-to-peer lending. For someone who prefers alternative banking, this form of lending is ideal. In fact, the amount of interest for peer-to-peer lending is lower than what traditional banks charge.

Two of the biggest disruptors predicted for the online banking and payment industry are the blockchain technology and cryptocurrency. Within this arena, people believe that tokenization will be the one thing that disrupts the financial sector most.

With outstanding potential, startup companies like Movile are revving up to take full advantage of what the blockchain technology offers specific to the incorporation of bitcoin. This, coupled with in-game purchases, is already popular in numerous developing countries, including Brazil.

Another prediction for blockchain technology is that of all disruptors to the financial sector, it could have the most profound effect. A lot of people stand firmly behind this technology, appreciating the fact that it is so transparent. These same people also appreciate that blockchain makes online payments easy.

Changes in Retail

Even the retail industry is experiencing a number of important changes. As a prime example, with sensors, big data, and beacons, the products that consumers buy can be monitored, tracked, and analyzed by retailers. By learning what people buy and how they shop, retailers have a unique opportunity to make changes that target customers better. Included in this are various strategies, such as flash sales, promotions, and coupons, among other things. If preferred, people can also make purchases in advance.

Transferring with P2P

Thanks to current and developing technology, people have many viable options for making mobile payments. As an example, with mobile P2P, bank transfers are possible. In looking at the payment industry, one company in particular stands out. PayPal has long been the domineering company. However, an increasing number of startups could shake things up.

Venmo is one competitor that offers P2P mobile payments. There is also Ozan.com, a startup that has real potential for moving to the number one spot in the payment industry. Ozan.com does not charge transaction fees.

When it comes to online payments, the number of options is truly amazing. For online banking and payments, companies must always put security first. Beyond superior protection, consumers and retailers would love to see transactions completed faster.